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Have you heard? The government is giving away free money! It’s all part of the Obama stimulus package. These government grants can be used for anything: buy a car, purchase a home, start a business or pay your credit card bills. Even take a vacation. And here’s the best part – because this is a grant, you never have to repay the money.

How do I know this? It’s all over the web. Just search “stimulus” or “government grants” and see what comes up. You’ll find site after site that promises to show you how to get your share of the “billions of dollars which go unclaimed each year.”

Con artists are creating phony web sites with names like PresidentObamaGrants.com andFederalGovernmentGrantSolutions.com. “They’re advertising them on search engines like Google and on social networking sites like Facebook. They’re also promoting them in chat rooms,” says Susan Grant, director of consumer protection at the Consumer Federation of America.

The scammers even create bogus blogs, to tout and drive traffic to their sites. I clicked on OfficialStimulusPayments.com which took me to “Jessica’s Money Blog.” Jessica, who does not give her last name, wants everyone to know how she got a $12,000 check from the government to start her own $5,000 a month business. She claims she learned how to get this free money from a site called GrantsForYou.com and she urges readers to get their share of the loot.

“Don’t fall for it,” warns Eileen Harrington, acting director of the Federal Trade Commission’s Bureau of Consumer Protection. “There is no money in the stimulus package to send out individual checks to people.”

The Grant University gets a failing grade
The Better Business Bureau has received hundreds of complaints from people across the country who took the bait. Instead of a grant, these victims got unexpected charges on their credit or debit card accounts.

In the past year, about 350 people complained to the BBB about a web site called The Grant University run by a company located in Draper, Utah. Tracie Oberlies is one of them. “I think they’re scam artists,” she says.

Oberlies wanted to buy a small farm in her hometown of Lugoff, S.C. She hoped the Grant University would help her get the money. The web site offers a 7-day trial membership for just $1.98. It gives you access to the company’s site plus a disc called “The Grant Professor.” Oberlies was unable to log on to the site, even when her disc arrived – 11 days after her order.

She called the company to cancel “and they kept giving me the runaround.” They told her it was too late to cancel and they would not refund the first month’s membership fee of $69.95 they had billed to her credit card.

In her complaint to the BBB Oberlies writes, “I have contacted them a minimum of ten different occasions and they continuously hang up on me and refuse to allow me to speak with a supervisor.” Eventually Oberlies got her money back, but only after she told the company she was going to go to the news media with her story.

The BBB gives The Grant University an “F” rating, its lowest grade. Jane Driggs, president of the BBB in Salt Lake City tells me that rating is based on the volume of complaints and the failure to resolve many of them.

“They are preying on people who really think they are going to get the free money,” Driggs says. “And there is no free money.”

Just the tip of the iceberg
A company in Las Vegas called The Grant Instructor has generated even more complaints – 450 so far. The BBB says the company, which also has an “F” grade, runs at least two dozen sites with names such as: American Grant Club, Get My Grant, Grant Dollars, Grants Are Easy, Grant Resource Center and Your American Grant.

Christopher Gaffer of Mankato, Minn. stumbled onto one of their sites called “The Grant Search.” Gaffer is on the board of a non-profit group in Mankato that helps provide affordable housing. Part of their funding comes from grants. Gaffer went online to look for new funding opportunities.

The initial cost was just $1.95 for seven days access to the Grant Search database. Gaffer paid but never got his access code. Seven days later, he found a charge for $49.50 on his credit card for “a recurring monthly membership.” Gaffer tried to contact the company but could not find a phone number or e-mail address. “It was a nightmare,” he says.

After complaining to the BBB and waiting a long time, Gaffer got a partial refund of $24.50. “It’s a scam,” he says. And he wants others to learn from his mistake.

I contacted both The Grant University and The Grant Search and did not receive a response to my request for a comment.

The bottom line
The Federal government does give out billions of dollars in grant money every year. Most of these grants either help students pay for college or are for clearly defined reasons, such as research or charitable work.

One more warning: Some grant scams come in the form of an e-mail offering you the chance to get free money. These are phishing scams sent by identity thieves who hope to steal your personal information. NEVER respond to one of these emails.